Debitum Review Summary
Debitum (previously Debitum Network) is a regulated Latvian platform that offers investments in small and medium-sized enterprises (SMEs). However, it has a controversial history. The company has been criticized for concealing information about its origins and defaulted loans from Ukraine.
Main takeaways from our Debitum review:
- Easy-to-use platform
- Not suitable for conservative investors
- Nontransparent communication
Read our Debitum review to learn more.
What is Debitum?
Debitum is a regulated Latvian platform offering asset-backed securities investments starting from just €10. Investors on Debitum can earn up to 15% annually.
Pros
- Intuitive investment platform
- Regulated in Latvia
Cons
- The community founded Debitum through a Token Generation Event (TGE), and the platform didn't honor its plans to develop usability for the DEB token
- Hiding statistical performance data from Chain Finance in Ukraine
- No secondary market
Our Opinion Of Debitum
Debitum isn't suitable for conservative investors with a moral compass.
On March 13, 2018, the company (former name Debitum Network) embezzled 17.2 million USD from its backers.
Debitum Network promised backers they would build a utility for the DEB token, giving the holders additional value.
As the years passed, the management started removing information about the DEB token from its website. The company also changed its name from Debitum Network to Debitum.
In July 2023, the former owner, Martins Liberts, sold the company to the new owners, Henris Jansons, Ingus Samins, and Eriks Rengitis.
During the transaction, the platform's legal name changed, and the new management declared that it was not liable for the DEB token asset.
The Latvian regulator approved this action, helping cover up the shady practices.
As of July 2024, Debitum has fulfilled its contractual obligation to P2P investors but has never returned the funds that helped finance the initial years of development.
Under new management, the platform continues to mislead investors by lying about the funds in Ukraine, which were never returned to investors.
To our knowledge, €1.75 M of investors' investments are still stuck in Ukraine. According to Debitum's statistics, all funds were repaid, which is inaccurate.
In July 2023, Debitum announced the restructuring of the debt in a three-party agreement through SIA DN Funding Alpha (Debitum). The platform introduced a wishful repayment plan that would pay out the outstanding principal within six years after the war in Ukraine was over.
In a June 2024 interview, the new CEO announced that an external investor is interested in purchasing claim rights in Ukraine from affected investors at a 40% discount.
In February 2024, Debitum was renamed to Debitum Investments and moved to a new domain to conceal previous connections and the negative reputation of Debitum Network.
We discourage investors from using this platform due to the above-mentioned reasons.
If you don't care about the platform's history and practices and believe the new management has good intentions, continue reading.
Debitum Bonus
You might be familiar with their cashback bonuses if you’ve invested on a P2P lending platform. Usually, you can use a special promo or referral code to receive a sign-up bonus. Often, you’ll need to deposit and invest a certain amount of money to claim your bonus, which is also the case with Debitum.
1% Cashback Bonus
If you sign up for Debitum using the link below, you will get a 1% investment bonus on your invested amount during the first 60 days after your registration.
Requirements
You can sign up on Debitum as a private investor or as a company. The only requirements are to be over 18 and have a bank account in your name.
During the registration, you'll need to provide:
- Copy of your ID or passport
- Information about your financial situation
- Email address
Transferring Funds
You must pass the verification process to transfer funds to your account. Debitum accepts funds only in EUR. We suggest using bank transfers as no fees are connected to SEPA payments.
No EUR bank account? No problem
Risk & Return
When evaluating P2P lending platforms, we always consider the securities provided by the borrowers, loan originators, and the platform itself.
Debitum offers investments in financial instruments, including business loans and invoice financing. The new investment vehicles are also called Asset-Backed Securities (ABS).
What is ABS?
An asset-backed security (ABS) is a financial instrument backed by a pool of loans. Debitum created the ABS to ensure investors a fixed-term, fixed-income instrument. It's worth noting that all ABS come with a buyback guarantee, as with investments in claim rights.
The pool of loans (ABS) on Debitum always has the same characteristics. It could be just loans categorized as factoring, trade finance, business loans, or car leasing. While the category is identical, there can be differences in maturity and nominal values (loan amount).
Have a look at this graphic to learn what an ABS is.
Debitum (and many others) moved from "claim rights in loans" to "asset-backed securities/notes" because of the requirements by the Latvian regulator.
The local regulation introduced new rules for P2P lending marketplaces, which meant that those companies had to switch to a different investment structure that offered investments in financial instruments.
Apart from the fact that the platform is now "regulated" in Latvia, there is no significant increase in safety. Investors are still exposed to default risks due to non-performing assets.
Loan Originators
Debitum is a P2P marketplace or, better, a P2B (peer-to-business) marketplace, which means that the platform offers financial instruments (pool of loans) from various lenders.
Those loan companies are handpicked and closely monitored by Debitum.
Debitum claims to vet its applicants so thoroughly that only 10% are accepted to list their loans on the platform.
Working with loan originators will bring additional risks to your investments, which are hard to evaluate from your perspective.
Debitum collaborates with four loan originators at the moment:
- Evergreen Capital
- Flexidea
- Triple Dragon
- Sandbox Funding
- DN Funding Alpha (Debitum's company)
If you want more information about each loan originator, head to the loan originator section at the footer of the platform and select the company you’re interested in.
Note that the availability of financial instruments from individual loan originators is subject to change.
Buyback Guarantee
A buyback guarantee protects the majority of loans listed on Debitum that the loan originator provides.
How does Debitum's buyback guarantee work?
Suppose the borrower is late with the loan payment by more than the agreed number of days (usually 90). In that case, the loan originator repurchases your claim against the borrower for the remaining principal, alongside the outstanding interest.
Additionally, if the loan repayment is late by more than the grace period (typically 15 days), you can receive a penalty rate in addition to the interest.
The buyback guarantee covers loan principal, accrued interest, and late penalty fees.
Additionally, all the financial instruments are secured by some additional collateral, which means that the risk for you should, in theory, be lower than investments in unsecured personal loans on platforms like Mintos, PeerBerry, or Robocash.
While this is all promising, there are downsides to investing in this platform.
Debitum usually lists loans with an interest rate of 8-15% and a loan term of up to two years. Remember that loan availability can fluctuate and that there is no secondary market.
Is Debitum Safe?
You should do your due diligence when choosing a new P2P lending platform.
Why?
Well, you only have to look at the short-lived platforms Kuetzal and Envestio to see what can go wrong when you don’t research.
We dug deeper than most financial bloggers, who are happy to praise Debitum for short-term commissions. Here is the result of our due diligence on Debitum.
Origins of Debitum Network
Debitum Network was founded by three Co-Founders Martins Libert, Donatas Juodelis and Justas Šaltinis.
All of them are connected to the Latvian factoring company Factris, which acquired another invoicing company Debifo back at the beginning of 2019.
According to the LinkedIn profiles of the co-founders Donatas Juodelis and Justas Saltinis, they are no longer active in developing the Debitum Network.
The three co-founders raised USD 17.2 M worth of Ethereum via a token generation event by issuing the so-called DEB token, which should have provided the users with potential returns.
Shortly after the issuance, the co-founders converted the raised crypto into fiat and funded the platform's development. None of the backers have ever seen a refund or benefit from the DEB token, which essentially funded the platform.
Who leads Debitum now?
Eriks Rengitis is the current co-owner and CEO of Debitum.
In 2023, the company was sold from the previous management to Mr. Rengitis. During the transaction, the management ensured that any trace of the DEB token would be erased to cover the scam committed by the initial founders.
Are There any Suspicious Terms & Conditions?
Debitum lets you view its terms and conditions and the assignment agreement before signing up.
We looked through the contract to see if we could spot any red flags. Here is a quick overview of what we've found:
NB: While we have read many P2P lending contracts and are experts in this field, it’s worth noting that we are not trained in law and don’t provide any financial or legal consultation.
Clause 10.11. - Deduction of Your Funds
The above clause is vague. We’re not sure under which circumstances a user would cause loss to the platform, other users, or originators.
Clause 10.3. - Risk of Default
As expected, the terms include a clause warning they could lose all their invested funds.
Clause 4.6. - Storage of Funds
A rather positive clause is 4.6. Debitum clearly explains that users’ funds are saved on segregated bank accounts. If the platform goes out of business, you should be able to access their funds as they aren’t connected to the company.
Clause 14.3 - T&C cannot be changed without prior notice
If you have read our guide about how not to get scammed by P2P lending platforms, you know that reserving the right to change the T&C without prior notice is a RED FLAG.
Debitum gives you ten days to review and accept the new terms and conditions.
Potential Red Flags
- Debitum raised millions from investors through the DEB token to fund the platform's development. None of the funds were ever returned.
- Information about the outstanding portfolio from the Ukrainian lender Chain Finance is not disclosed on the platform.
- The platform presents a 0% default rate, which is inaccurate.
Usability
Debitum's platform is straightforward to use. You can use auto-invest or invest manually.
Auto Invest enables you to define specific criteria, such as interest rate, loan term, and loan originators.
Investing manually on Debitum is simple.
Just use the navigation at the top of the page to navigate to the primary market ("Invest") and select one of the financial instruments.
It's worth mentioning that most ABS pay monthly interest, improving your cash flow.
Click on individual ABS to review further information or invest in them directly.
Enter your investment amount (min. €50) and confirm your action.
Your investments will be shown under your dashboard's "My Investment" view.
Debitum's ICO and the DEB Token
More experienced investors know Debitum Network has participated in a Token Generation Event. The platform sold DEB Tokens (utility tokens) to contributors, and the funds from this fundraising event were used to build the platform and expand the business.
According to Debitum’s white paper, the platform aimed to solve the credit gap for SMEs. The founder confirmed that the platform still follows this goal.
If you want to learn more about the ICO and the utility plans for the DEB token, we suggest watching our entire P2P talk. At 13:45, the former CEO confirmed that they raised close to 18,000,000 USD, which they used to develop the platform. The CEO also promised to continue working on the utility for the DEB token, which never happened.
🧾Does Debitum deduct taxes?
Debitum withholds 20% tax from your earnings from asset-backed securities.
To apply for the option of not having taxes withheld from your interest payments for five years, you must complete the tax verification step in your profile.
- Download Residence Certificate-Application for Tax Relieves form provided on the Debitum platform in the "My Account" section under the "Tax Residency" tab
- Fill in the marked fields in light blue (you need to fill only sections I-IV)
- Print and sign the form
- Upload a scan or photo of the form on the Debitum platform
- You must provide a document proving you are a tax resident of your country. The document must have your name, surname, personal code, taxation year, and confirmation that you are a tax resident.
After you have provided all documentation, you will be relieved from taxes for five years. For further information, please consult your local tax expert.
Liquidity
Before signing up for a platform, you should know how long it would take to withdraw your entire portfolio.
While Esketit or Bondora's Go & Grow offers you excellent liquidity during normal market conditions, most platforms don’t.
So, how does it work on Debitum?
For starters, there is no secondary market so you can't sell your investment as you wish.
Instead, you can only withdraw your money from the platform if you’re at the end of the loan term, you receive early repayment, or if the buyback guarantee kicks in.
The loan period on Debitum ranges from only a few days to up to two years, and two years is quite a long time to wait if you want to withdraw your money earlier than initially planned.
Support
Debitum's extensive FAQ section will answer most of your questions. If you can’t find the answers, you can email them at support@debitum.network.
We tested Debitum's support on several occasions. The support is very responsive when answering questions about the platform's usage.
Critical questions are typically dismissed. The new management doesn't take any responsibility for the losses caused to the Debitum Network's initial backers.
Debitum Alternatives
Debitum is certainly not the best platform in the industry. The company's dark history indicates that conservative investors should avoid it.
While the loan availability on the best P2P platforms is limited, the risk of losing your hard-earned money is much lower.
Here are a few suitable Debitum alternatives.
Fintown
Fintown is a Czech-based crowdfunding platform raising funds to refinance the equity of the Vihorev Group, which is developing rental properties in Prague. If you invest in operational rental properties, you can expect monthly rental income, increasing your cash flow from P2P loans.
The company backing Fintown has a good track record and excellent payment morale. Learn more about the platform in our Fintown review.
Esketit
Esketit is a Latvian P2P lending marketplace run by the experienced founders of AvaFin, a well-known lending group in Europe. The platform offers various investment opportunities with reasonable risk levels. Since 2021, it has paid its investors over €8 million in interest.
Learn more about Esketit in our Esketit review.
PeerBerry
PeerBerry is one of Europe's most trusted P2P lending marketplaces. This platform is the only company already repaid over 96% of war-affected loans from Ukraine.
Debitum has repaid none of the funds from Ukraine, even though it likes to present the opposite. While the loan availability is minimal on PeerBerry, and you will have to invest manually to deploy your funds, the risk on the platform is significantly lower.
Learn more about PeerBerry in our PeerBerry review.
